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In the Spring Statement the Chancellor announced National Insurance changes. Specifically, an alteration to the earnings threshold. This is the point at which workers start to pay National Insurance Contributions (NICs). So, what does it mean for employees and the self-employed? 

 

National Insurance changes 

Basically, the threshold increases from £9,880 to £12,570. The Spring Statement was on 23 March 2022. Why the delay in introducing the amendment? Quite simply, to give payroll software providers time to implement it. 

 

Increase in wages 

So, what do the changes mean in practice? They amount to a wage increase for employees. There’s a rise in the monthly pay level when NIC Class 1 deductions kick in. It increases from £823 to £1,048 per month. Consequently, employees benefit from an extra £29.81 per month. 

 

Employees not paying NICs 

Certainly, some employees will no longer pay NICs. How does this affect workers earning more than £533 per month (£123 per week)? They will receive pension credits. Importantly, these count towards the State Pension and Jobseekers’ Allowance. 

 

Impact on the self-employed 

So, a positive outcome for employees. But where does this leave the self-employed? Further good news. The changes will save them up to £165 per year. 

 

Employers’ NICs 

To be clear, these changes affect workers who pay NICs. There are no changes to employers’ National Insurance contributions. 

 

For more information 

Find out more about National Insurance changes.